HOUSTON – (Realty News Report) – A groundbreaking was held Thursday for a 28-story, 375,000-SF office building developed by Skanska USA Commercial Development in downtown Houston adjacent to Discovery Green urban park.
The tower, located at 1550 Lamar Street, will be completed in 2024, Skanska says.
Skanska’s groundbreaking comes at a time when the Downtown Houston office market is going through a rough patch. Downtown has over 13 million SF either vacant or up for sublease. First quarter statistics by Madison Marquette placed the downtown office vacancy rate at 22.6 percent and an availability rate of 29.7 percent – measurements of vacancy that can give landlords nightmares.
Houston has its highest vacancy rate in decades as contraction in the energy industry and a downdraft from the pandemic have damaged the market’s fundamentals.
But the new Skanska tower will likely benefit from what office leasing pros call “flight to quality.” In other words, new office buildings with the latest in amenities andaccoutrements are attracting tenants while older office buildings slide into decline.
Skanska is not building the tower as a completely speculative venture. A key tenant has been signed – the global law firm Norton Rose Fulbright.
CBRE’s Kristen Rabel, Parker Duffie, and Joel Douthit are the leasing agents representing the landlord the tower.. The Class A office building will anchor “Discovery West,” a three-block, master-planned district that Skanska is developing.
Skanska acquired the 3.5-acre building site in the fall of 2019 for $55 million. The four downtown parcels are surface parking lots near Dallas, Lamar and La Branch streets, including a full city block across from Marvy Finger’s trend-setting One Park Place residential tower.
Skanska, which has a parent company based in Sweden, is a large construction and development company specializing in building construction, civil infrastructure and developing commercial properties. Skanska had sales of SEK 74 billion and about 7,900 employees in its operations in 2019.
This is the first tower project in Texas designed by BIG-Bjarke Ingels Group, an internationally known architecture firm.
To celebrate the groundbreaking Thursday, Skanska executives were joined by Mayor Sylvester Turner, and local leaders at The Grove restaurant in Discover Green park by George R. Brown Convention Center.
“It’s a great day for Houstonians, Skanska, and BIG-Bjarke Ingels Group as we share our plans for 1550 Lamar Street and begin the process of transforming the site into a stunning development filled with spacious offices, lush greenery and sustainable features that aim to benefit the health and wellness of its future tenants,” said Matt Damborsky, Executive Vice President for Skanska USA Commercial Development’s Houston market.
Architect Michael Hsu has been tapped to design the interior amenity spaces, which include a fully-equipped fitness center, rooftop event space and terrace on level 28, and community spaces throughout the property.
Hsu designed the Understory food court in Downtown Houston’s 35-story Bank of America Center tower, the most recent office building to be completed in downtown.
Skanska’s building is not the only new skyscraper rising in Downtown Houston.
Hines is building a 47-story, 1 million SF tower on Texas Avenue. That building, which is about 40 percent leased, should be complete by year’s end.
June 24, 2021 Realty News Report Copyright 2021
For more about Texas real estate, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon http://tiny.cc/4a2g6y
Houston 2020 Ebook version https://tinyurl.com/4xm7z8b5
Image Courtesy Skanska
File: Downtown Skyscraper Breaks Ground